EMusic.com Adds ‘Tunes’ In $130M Deal

Downloadable music seller EMusic.com (Nasdaq: EMUS) announced today that it has signed an agreement to acquire privately-held music destination site Tunes.com, whose properties include RollingStone.com and DownBeatJazz.com.

The stock-for-stock deal is valued at approximately $130 million (US$), based upon the closing price of EMusic.com stock on Friday. The deal is expected to close in the first quarter of 2000. Shares of EMusic.com climbed 2 to 18 in early trading today after the news.

“Since its inception, EMusic.com has been focused on the emerging market for downloadable music,” said Gene Hoffman, president and CEO of EMusic.com. “This acquisition is a logical and aggressive expansion of our business model.”

Tunes.com’s network of sites reaches more than 1.3 million unique users and receives more than 28 million page views each month. Tunes.com benefits from promotion in the print version of Rolling Stone magazine, as will the newly-formed company.

“Since the future of music is unquestionably digital, it is appropriate that RollingStone.com will be on the leading edge through our partnership with EMusic.com,” said Jann Wenner, editor and publisher of Rolling Stone.

Content Will Be Integrated

After the deal closes, EMusic.com will integrate Tunes.com’s content, such as music news and reviews, into its own site. EMusic.com expects that the combined company will reach approximately 1.5 million unique users and receive more than 35 million page views each month.

“We believe that online music fans purchase music in two ways — they either go directly to a retail site with the intent to buy, or they make a purchase decision after reading an article or hearing a track through Internet radio,” Hoffman said. “This acquisition allows us to integrate these channels in a seamless fashion.”

This deal is EMusic.com’s second notable transaction of the month. On November 16th, the company announced that it would purchase music site Cductive.com in a stock-for-stock transaction valued at about $38 million. Cductive.com represents more than 350 independent music labels.

Tunes.com Had Planned IPO

Tunes.com had originally planned to raise money with an initial public offering. The company filed to go public in June, but the company ended up postponing its offering at least partially because of market conditions.

Tunes.com had intended to raise as much as $44 million by offering four million shares of stock at an expected price range of $9 to $11.

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